Author: omniadmin

As you probably have seen, there are not a lot of dental practice’s for sale.  The seller’s market continues for dental practices.  The great practices get snatched up literally before they hit the market.  The practices that need a lot of work are out there, but it’s difficult to assess what you are getting.  Here are a few tips to evaluate a practice that may not be perfect, but might have some potential:

1.  Is the trend in the practice production going up by more than 10% per year for the past 3 years?  If it is that’s a good sign the practice is growing steadily.

2.  Look at the unscheduled treatment plan report.  Is there a good amount of treatment out there?  Has the doctor been diagnosing treatment, or doing a lot of “watching”.  The more treatment left for you, the better.

3.  Is there enough patients to keep you busy a minimum of 3 days per week. That typically means 500 to 600 patients.

4.  Does the practice take all the major insurances?  If not, that tell you that you can get an increase in new patients by adding more insurances.

5.  Does the selling doctor refer out a lot of treatment? – Endo, surgery, etc.,  If this is the case and you do endo and surgery, that’s a quick 10% increase in production.

6.  What’s the competition like?  Are there dentists within 3 miles?  How old are they and what are their practices like.  If they are older practices, that means those docs may be happy with their level of production and not into competing for business.

7.  Do the neighboring dentists advertise?  If not, you can beat them with strategic marketing.

8.  What type of advanced procedures does the selling dentist do?  Invisalign, implant placement, etc.  If you do these, it’s another increase in production.

9.   Are there a lot of inactive charts within the last 3 years?  You can typically activate  number of the inactive charts by aggressively calling and mailing the patients.

10.  Has the practice been remodeled recently?  A simple remodel, even painting, carpet can freshen up a practice and entice existing patients to start referring again.

The next time you’re looking at a practice that may appear run down, do a little more detective work and you may discover a diamond in the rough!

-Rod Johnston, MBA. CMA

Veterinary practice business owners have a significant opportunity to make a return on investment when they enter the marketplace and sell their business. But to maximize the value of their return, they must work with proven industry experts. In this article, the trusted team at Omni Veterinary Practice Group explains five reasons to hire a veterinary practice business expert during a veterinary practice sale.

1. Database of Buyers
Those within the marketplace will have access to a comprehensive database of practice buyers. They will have completed all due diligence on those capable of completing the transaction and have developed comprehensive business relationships within the industry. This can help streamline the business transaction and ensure sellers receive a lucrative price for their business.

2. Full Access to Marketing Channels
Specialists within the veterinary practice marketplace can help enhance sale strategies through effective marketing channels. They know the areas potential buyers look for buying opportunities and can craft refined marketing strategies designed to appeal to specific types of buyers. Their access to these highly effective marketing channels also means industry specialists can help maximize the value of the business and reduce sales roadblocks.

3. Help Selecting a Transition Plan
Working with a trusted veterinary practice sales expert also means that business owners can select their ideal transition plan when selling their company. For example, they may wish to only sell part of their practice and remain the owner of the rest of the company. Specialists within the industry can help coordinate this process and ensure that the full value of the entire organization is protected during the sale. Veterinary practice sales experts can also help coordinate sales to corporate groups by individual owners, advising the owner on their rights within the process and helping to complete the complex documentation involved within the sale.

4. Direct Access to Sales Knowledge
One of the leading reasons so many veterinary business owners are now choosing a specialist for the sale of their practice is that specialists can answer questions based on direct knowledge within the industry. They can help the practice owner decide what to do with their equipment after the sale. for example. They can also answer questions related to post-sale staff needs, as well as how to communicate with staff directly during the sale process. This eases the sales transition and ensures business owners also have an expert available to consult with throughout.

5. Creating a Valuation for the Company
By determining the value of the company, veterinary practice experts can ensure their client achieves full value for money. They can use their industry knowledge, as well as their understanding of the local marketplace, to ensure the company is valued at a level that will attract high-quality buyers and ensure a fast, and profitable sale.

By working directly with a trusted veterinary practice sales expert, veterinary business owners can maximize the return for their business investment. To learn more, speak with the team at Omni Veterinary Practice Group directly at 877.866.6053 or email info@omnipg-vet.com.

By working with trusted industry specialists, veterinary practice owners can ensure a swift profitable sale for their business. The team at Omni Veterinary Practice Group has many years’ experience within the veterinary practice marketplace. They have helped hundreds of owners understand the sales process and worked with a range of clients to ensure their practices are sold with seamless precision for lucrative returns. In this article, their experts explain the business sale process and how Omni Veterinary Practice Group prepares business owners for the sale of their veterinary practice.

1. Financial Reporting
A critical element in the sale of any business property is financial reporting. Buyers will complete due diligence on the company they are purchasing and it is important all financials are in order and ready for review. Omni Veterinary Practice Group helps business owners complete the financial reporting process. They gather the required documents and ensure the documents are completed accurately and according to the strict standards within the industry.

2. Consolidating Business Resources
During the search for a local veterinary practice for sale, buyers will be reviewing the market for practices that are lean and do not have excess resources to manage and pay for over the long-term. After assessing the finances of the practice, Omni Veterinary Practice Group works to consolidate the business’s resources, removing unnecessary expenses related to vendors, staff, and equipment and helping business owners understand the resources that are important to their company and potential future buyers.

3. Remodeling Work
In consulting with veterinary practice owners, Omni Veterinary Practice Group will advise them on potential remodeling requirements. They will guide owners on the paintwork and property upgrades required to ensure the practice is sale-ready. This process is completed alongside trusted building inspection teams that analyze all areas of the property to determine whether any upgrades are required before placing the practice on the marketplace. Any issues in the practice will be highlighted by the buyers’ representatives during their due diligence on the practice, and so sellers that finish remodeling work proactively and ensure all problems are resolved can showcase their commitment to the sale.

4. Analysis of Practice Value
When getting their veterinary practice ready for sale on the marketplace, owners must consider the optimum value for the company and how they can harness this valuation to attract the right types of buyer for the organization. Omni Veterinary Practice Group has significant experience in this area of the marketplace. They can help business owners detail the most important elements that determine a practice’s value. For example, they know that margins are more important to buyers than gross production levels. And so they can use this knowledge to value the practice at the highest rate possible according to market demand.

Omni Veterinary Practice Group is a clear leader within the local industry. To learn more on the company and their services, contact their offices directly today at 877.866.6053 or email info@omnipg-vet.com.

Often times, a potential buyer of an existing veterinary practice will simply take on the existing lease that the seller had with the landlord.  The seller will do what’s called a lease assignment and assign the lease over to the buyer.  But, did you know that there may be a chance you can renegotiate terms in the lease even though there may be a few years left to the end of the term?

When you get a copy of the lease, you or your adviser should contact the landlord or property manager.  Be sure the seller has informed the landlord that they are selling the veterinary practice first.  If there is a short time left on the lease, the landlord may be willing to do an extension on the lease.  You can put conditions on the extension that can include getting a tenant improvement credit to cover new paint, carpet, etc., free rent for a few months, lower rent, etc.,  I’ve even had a situation where the landlord loaned money to the tenant to completely remodel the practice.

Remember that everything is negotiable.  Don’t automatically assume the lease is set and you cannot change anything.  At the same time, know how to negotiate.  If you go for a home run right off the bat, you may turn the landlord off and they won’t be willing to negotiate.  If you’re working with a broker, it’s best to let them handle the negotiating.  They’re the experts and can save you thousands if done right.

Our preferred strategy to maximize practice value and reduce the stress and time required to sell a veterinary practice involves addressing common issues that buyers are focused on before the practice is placed on the market.

In this article, we will review the practice attributes that today’s buyers are paying close attention to – their “Hot Buttons”- as well as our recommendations on how to address those Hot Button issues in order to make the practice as valuable and marketable as possible.

Hot Button #1:  Asking Price.  Today’s buyers are sophisticated and very well informed about the market value of veterinary practices in their area.  If the practice is initially priced well above its true market value, it will take much longer to sell.  Even if you find a buyer who is willing to offer more than the market value, overpriced practices will ultimately end up selling near their true market value once the buyer’s advisors and practice lenders begin to weigh in on the practice purchase price.

Solution:   Set an asking price for the practice within the normal range of market values in the area.  This is accomplished by conducting a thorough analysis of comparable sales in the local market.  Be sure to engage an experienced, local broker to accomplish this task.

Hot Button #2:  Practice Location.  We find that the majority of buyers are looking to purchase a practice primarily in urban/suburban areas.  Therefore, it usually takes longer to sell a veterinary practice in a rural area.  In addition, most buyers prefer a retail-type space with good visibility, although an attractive professional building location is also a viable option.

Solution:  Utilize a long-term, strategic analysis of your current location.  If the area is “going downhill” or the building in which the practice is located does not have the type and volume of tenants it once did, consider the costs vs. benefits of relocating your practice to a better area or a different type of building.  If you are 7 to 10 years away from transitioning your practice, the benefits and potential gain in practice value can often justify the investment required to relocate.

NOTE: If your practice is in a rural area, the other “Hot Buttons” discussed in this article become even more important to buyers.

Hot Button #3:  Equipment and Aesthetic Appearance/Cleanliness.  Because most buyers have been practicing for less than 5 years, they would prefer to utilize newer equipment and digital technologies in their practices.  The practices that have digital radiography and chair-side computers tend to sell quicker and at a higher price than their counterparts.

Also, first impressions are important, so practices that do not have a positive “curb appeal” when buyers walk in the door for the first time can lose value and take longer to sell.

Solution:  Just as with your location analysis, it is imperative to have a long-term plan for keeping your equipment and facility up to date.  The more time you have until the practice sale, the easier it will be to garner a sufficient return on investment from purchasing new equipment.  We recommend that you upgrade your equipment 3 to 5 years prior to selling your practice.

In regard to aesthetics, we again recommend updating your office décor and finishes 3 to 5 years before the sale to initiate a positive response from potential buyers.  Hiring an interior designer or remodeling the practice can enhance practice value and marketability.

Hot Button #4:  Practice Cash Flow.  Most buyers are looking for practices that generate sufficient net cash flow (after operating expenses) to cover their personal living expense needs, which can be substantial considering that many potential buyers have student loan debt in excess of $200,000.  Additionally, the ability for a buyer to obtain financing for the practice purchase is heavily tied to the historical cash flow of the practice.

Solution:    Cash flow is related to both expense control and revenue enhancement.  Start by ensuring that your major expense categories (staff payroll, veterinary supplies, and lab fees) are within industry norms.  Next, make sure that you are doing everything possible to enhance practice revenue, increase case acceptance, attract new patients, and retain your existing patience base.

Hot Button #5:  Type of Patient Base.  When we sell a veterinary practice, our experience has been that the majority of buyers are looking to acquire a practice with a fee for service and/or PPO patient base.  DMO patient bases are definitely waning in popularity and, with the recent changes to Medicaid reimbursement, a patient base with a significant Medicaid component may be viewed negatively by some buyers.

Solution:   With the help of a practice management or insurance consultant, conduct an analysis of the insurance plans that you currently accept along with those that are prevalent in your market area to determine if it is worthwhile to drop some plans and possibly add others.  If handled properly, these changes may help increase new patient flow, decrease practice overhead, and make your practice more valuable and marketable to potential buyers.

If Medicaid accounts for the majority of your patient base, you have likely already experienced a significant decrease in revenue and should consider developing a long-term strategic plan to build a fee for service and/or PPO patient base.  A location/demographic analysis will be essential to identifying potential opportunities in your area.

Hot Button #6:  Active Patients & New Patient Flow.  Active patient count and new patient flow are extremely important to buyers in evaluating the health and goodwill of a practice.  We have often heard that, on average, patients switch Veterinarians every seven years.  Therefore, an easy way to determine if your patient base is growing or declining is to divide your number of active patients (seen in the past 24 months) by seven and compare the result to the number of new patients you have seen in the past year.  If the number of active patients leaving your practice each year is larger than the number of annual new patients, then your patient base is shrinking and may be cause for concern.

Solution:  Conduct a periodic analysis of your active and new patient counts to evaluate the health of your practice and identify trends that may need to be corrected.  Enhancing the patient experience and maintaining an  effective recall system can ensure maximize patient retention, while implementing an internal marketing strategy (asking for referrals from existing patients) and an effective external marketing strategy (such as a website or direct mail) can improve new patient flow.  Hiring a practice management consultant on a periodic basis can help you and your team to stay on track in these areas.

Hot Button #7:  Upside Potential.  When an acquisition opportunity provides the buyer with the potential to increase revenue through making minor changes in the practice, the buyer will typically be more inclined to offer full market value for the office.  Retaining services that are being referred to specialists, increasing operating days or hours, and implementing relatively simple internal or external marketing strategies are all attractive ways for a buyer to increase revenues and patient flow.

Solution:  While you should take advantage of the revenue potential of your practice prior to the sale, be sure to identify and quantify any opportunities that you have not pursued to your practice broker and potential buyers.

By understanding the factors that influence a potential buyer’s perception of value, making the changes necessary to maximize practice value and marketability, and planning ahead, practice owners can ensure that they will be in a great position when the time comes to sell their most valuable asset.

-Rod Johnston, MBA. CMA